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The town is famous for the folk tale of the Pied Piper of Hamelin (German: Der Rattenfänger von Hameln), a medieval story that tells of a tragedy that befell the town in the thirteenth century. The version written by the Brothers Grimm made it popular throughout the world; it is also the subject of well-known poems by Goethe and Robert Browning. Although Hamelin has a fine medieval old town with some remarkable buildings, the main attraction is the tale of the Pied Piper. In the summer every Sunday, the tale is performed by actors in the town centre.

Hamelin started with a monastery, which was founded as early as 851 AD. A village grew in the neighbourhood and had become a town by the 12th century. The incident with the Pied Piper is said to have happened in 1284 and may be based on a true event, although somewhat different from the tale. In the 15th and 16th centuries Hamelin was a minor member of the Hanseatic League.

The era of greatest prosperity began in 1664, when Hamelin became a fortified border town of the Duchy of Brunswick-Calenberg.

Hamelin was surrounded by four fortresses, which gave it the nickname "Gibraltar of the North". It was the most heavily fortified town in the Kingdom of Hanover. The first fort (Fort George) was built from 1760–1763, the second (Fort Wilhelm) and third were built 1774 and 1784, the last fort (called Fort Luise) was built 1806.

In 1808 Hamelin surrendered without fighting to Napoleon, after the Battle of Jena-Auerstedt was lost. All of the historic walls and guard towers were pulled down by Napoleon's forces. In 1843 the people of Hamelin built a sightseeing tower out of the ruins of Fort George on the Klüt Hill. The sightseeing tower is called the "Klütturm" and is a popular spot for tourists with an amazing view over the historic town.